“People need to accept the concept of ‘paying for the climate’”

At the European Council climate meeting attended by the 28 European Union heads of state in Brussels on October 23 and 24 2014, Gérard Mestrallet, CEO of ENGIE, spoke to Les Echos on behalf of the Magritte Group to explain the approach adopted by the 10 leading European energy providers in favor of a European energy policy with ambitious CO2 emissions reduction targets.

Interview with Gérard Mestrallet for Les Echos (Extracts)

What do you believe are the Council’s challenges?

It is an important Council meeting, the last of the outgoing Commission, which is set to adopt the climate-energy package presented in January. Like the United Nations Summit held a month ago in New York, its outcome is crucial to ensuring the success of next year’s 2015 Paris Climate Conference (COP21). Last week, along with five other directors of the Magritte Group, I met François Hollande to insist on the importance of this summit in the eyes of industrial companies. We need rules. The worst thing for us is uncertainty. The energy competitiveness of European industries is at stake, at a time when electricity in Europe is twice the price of the United States and gas is three times the price. European energy policy is based on three components: climate, competitiveness and security of supply. So far, climate has been given priority.

What concrete reforms do you hope to see?

The members of the Magritte Group have very varied profiles. There are leaders in renewable energy as well as major producers of CO2… And that does not stop us fighting for the ambitious target of a 40% reduction in emissions by 2030 to be made obligatory. Let’s be bold! To succeed, we are convinced that the carbon price should become the reference parameter, much more than taxes, whose primary objective is to raise money. This is a key issue: people need to accept the concept of ‘paying for the climate’. I have also argued in the UN, in front of around 100 heads of state, in favor of adopting this idea adopted worldwide. Some Chinese cities, such as Shanghai, have fully understood the benefits and have already created carbon markets.

What do you think of the measures planned by Brussels concerning the CO2 market?

We have made progress towards reviving the carbon market and avoiding its collapse as in 2009, progress that must now be approved. A Market Stability Reserve, a sort of central bank for certificates, may intervene on the market to avoid a further collapse in prices. Certificates will no longer be issued in a linear way, but will have the potential to be adjusted up or down depending on growth. But this is only likely to begin in 2021, which is much too late. It needs to happen now. Finally, we want the 900 million certificates withdrawn from the market to be destroyed and not put back on the market as planned from 2018. Our forecasts show that this would cause a further fall…